1. Axon Enterprise, Inc. (NASDAQ:AXON)
EPS Growth, Past 5 Years: 218.25%
Axon Enterprise, Inc. (NASDAQ:AXON) manufactures weapons and technology for law enforcement agencies, the military, and civilian use. The company integrates cloud software solutions and hardware devices to help enable modern policing, defense, and security.
With a staggering 218% EPS growth over the past 5 years, Axon Enterprise, Inc. (NASDAQ:AXON) is one of the best defense stocks to buy. Investor interest has further strengthened in the company after it reported robust financial results for the fiscal year 2024 in February.
Axon Enterprise, Inc. (NASDAQ:AXON) generated a revenue of $2.1 billion, growing 33% year-over-year, and nearly double from the figure two years ago. The company also marked 12 successive quarters of 25% or above revenue growth. Annual net income stood at $377 million, supporting the non-GAAP net income of $466 million.
According to Insider Monkey’s database, 64 hedge funds held a stake in Axon Enterprise, Inc. (NASDAQ:AXON) at the end of the fourth quarter of 2024, improving from 46 in Q3. Here is what Sands Capital Select Growth Fund stated about AXON being an attractive stock in its Q4 2024 investor letter:
“Axon Enterprise, Inc. (NASDAQ:AXON) is a leading provider of public-safety technology, including body cameras, software, and the TASER electroshock device. Axon’s mission is to “protect life, capture truth, and accelerate justice.” The company is the sole manufacturer of the TASER and is the world’s leading provider of body cameras by market share. Demand for Axon’s safety solutions is both secular and countercyclical, in our view. The company benefits from the secular shift toward safer and more accountable policing, and demand is likely to be durable in recessionary periods, when crime tends to rise and governments tend to increase spending. While its hardware and software can be purchased separately, they are increasingly sold as a bundle, resulting in highly visible and recurring revenue with long-duration contracts. This bundled ecosystem works together to automate, record, and store tamperproof evidence in the cloud. The bundle also benefits from positive flywheel effects because Axon uses anonymized usage data to drive hardware, software, and training improvements, ultimately resulting in an attractive and effective service for users. Over the next decade, we expect hardware to become a smaller part of Axon’s overall business, with the higher margin software component becoming a more meaningful revenue driver.”
Overall, AXON ranks first among the 10 Defense Stocks with the Highest EPS Growth in 5 Years. While we acknowledge the potential of defense companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AXON but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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